The Advisory: Volume 8, Issue 1, January 2010
New Trust Accounting Controls and Audit Regime to be Phased In
By Steve Raby, QC, Bencher and Chair, Trust Safety Implementation Task Force, Law Society of Alberta
The Law Society of Alberta will be implementing, in a phased approach, a new trust accounting controls and audit regime. The commencement of such phased implementation will occur in 2010, perhaps beginning in May. Further notice will be provided when a firm implementation commencement date has been set.
The recommendations made by the Law Society of Alberta's Security of Trust Funds Implementation Task Force will result in changes to the trust accounting rules and the Law Society's audit strategy, and will better define the claims process of the Assurance Fund.
The new regulatory structure for safety of trust property will address concerns about rising threats to the security of trust funds, for the protection of the public interest as well as the profession.
Key changes include:
1. Amendments to the Rules of the Law Society of Alberta in early 2010 to prohibit use of trust accounts if no legal services are provided. This will make it clear that lawyer trust accounts are only to be used in conjunction with the provision of legal services. Lawyers who currently have monies in their trust accounts which is not related to the provision of legal services should take steps to remove these funds from trust by January 31, 2010.
2. Additional amendments to the Rules to accomplish the implementation of the new trust accounting controls and audit regime referenced above. These rule changes will mean a significant increase in controls, and will clarify and expedite reviews and investigations associated with complaints related to trust funds. Accounting rule amendments may include the following requirements:
- Trust account approval for lawyers;
- New electronic banking transaction requirements;
- Express lawyer accountability for supervising staff and trust transactions;
- Electronic reporting requirements; and
- Miscellaneous matters including the requirement that lawyers not sign blank cheques and the requirement to comply with CDIC filing.
3. Strengthening the Audit processes to provide adequate assurance to the Law Society of Alberta that law firms are complying with trust accounting rules.
4. Reviewing the Assurance Fund regime with respect to limits on claim amounts, time to submit claims, class of claimants and ability to settle claims.
Since 2007, progress has been made in terms of strengthening the Law Society's trust controls and enforcement. This work will demonstrate to the public that the Law Society of Alberta and Alberta lawyers continually strive to uphold the Society's reputation as a model regulator.
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